Trump Lays Out Drug Plan, Calling for More Competition, Less 'Global Freeloading'

Kerry Dooley Young
May 11, 2018

President Donald J. Trump outlined broad steps his administration plans to take to make drugs more affordable in the United States but stopped short of calling for direct Medicare negotiations on the price of medicines in a speech at the White House today.

In a widely watched speech, Trump offered a brief, optimistic take — through what the administration calls the American Patients First plan — on how soon Americans might see changes in their drugstore bills, a view seemingly in contrast with a more measured outline envisioned by Department of Health and Human Services (HHS) Secretary Alex Azar, who spoke right after Trump.

Trump said there would be a "total victory" in terms of addressing "unfair pricing" of drugs in the United States.

"It will happen, and it's going to happen quickly," Trump said in his speech. "We're going to see those prices go down. It will be a beautiful thing to watch."

He also said he will need Congress to pass new laws to help rein in rising drug prices. Trump also said he would have trade officials work to end "global freeloading," referring to lower prices for medicines generally paid by consumers in other affluent countries despite significant US investment in medical research.

"America will not be cheated any longer, and especially will not be cheated by foreign countries," Trump said in his speech.

Following Trump to the podium, Azar outlined plans to strengthen Medicare's clout in drug negotiations, as well as plans to leverage the US Food and Drug Administration (FDA) in a quest to curb rising drug prices. Azar suggested having the FDA require drugmakers to disclose prices in their direct-to-consumers ads, one of the fresher ideas presented today.

The Blueprint

The White House blueprint, released on Friday, reviewed many of the ideas presented in Trump's fiscal 2019 budget request in February. The Trump administration also is seeking an inflation-based limit on the rising costs for drugs dispensed at physicians' offices and hospitals, which are covered by the federal health program's Part B section. The document called for a report about having insurers who manage the Medicare Part D plans, used by consumers at pharmacies, also manage negotiations for certain costly Part B drugs.

"Our blueprint brings the latest negotiation tools to our government programs. It also expands private-sector negotiation to parts of Medicare, where right now, HHS just gets the bill and we pay it," Azar said, referring to the fact that the federal government has little power to negotiate costs for Part B drugs — a problem that has been widely derided.

Azar also emphasized strategies for increasing the clout of insurers in managing Medicare drug purchases, a tack that the administration detailed in February as part of its fiscal 2019 budget request. The White House wants to ease rules about how many different drugs in categories of medicines must be offered.

Azar, who has extensive experience in both the pharmaceutical industry and Washington, cautioned that the goal of lowering drug prices won't be completely accomplished for a while.

"This is not a one-and-done deal," Azar said. "It is a comprehensive process, and as the president said, it will take time to reorder an entire complex multibillion system."

'Eliminating the Middlemen'

Still, in his speech, Trump made bold promises about reducing the profits of some players within the pharmaceutical industry.

"We're very much eliminating the middlemen. The middlemen became very, very rich. Right?," Trump said. "Whoever those middlemen were — and a lot of people never even figured it out — they're rich. They won't be so rich anymore."

These include pharmaceutical-benefit managers (PBMs), who have been a target of increased focus in debates about drug prices. These firms are intended to negotiate discounts with drug makers on behalf of employers and consumers. But the White House blueprint noted that PBMs can actually benefit from higher drugs costs, with resulting bumps in their fees. The Trump administration said it's seeking feedback about a number of issues, including the responsibility of these middlemen.

"Should PBMs be obligated to act solely in the interest of the entity for whom they are managing pharmaceutical benefits?" the blueprint asks.

Trump earlier signaled some support for having Medicare more directly negotiate drug prices rather than rely on insurers to serve as middlemen in these transaction. On Friday, Trump steered clear of this topic in his speech.

Trump also didn't address calls for allowing imports of drugs from other nations into the United States to help consumers control costs. AARP backs both of these ideas.

"We welcome a broad look across the entire drug supply chain to find ways to help drive down drug prices," said AARP Executive Vice President and Chief Advocacy & Engagement Officer Nancy LeaMond, in a statement. "AARP also strongly believes that it is critical that any proposals to lower prescription drug costs don't simply shift the costs around in the health care system without addressing the root problem: the prices set by pharmaceutical companies."

The drug industry immediately raised objections, though, to fairly advanced proposals in the White House blueprint for changing how Medicare Part D pays for drugs. These could "undermine the existing structure" of the program and cut off senior citizens' access to medicines, said Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Stephen J. Ubl, in a statement.

"Misaligned incentives in the supply chain are resulting in savings for middlemen, but higher costs for patients," Ubl said. "After negotiations, medicine prices increased just 1.9 percent last year, below the rate of inflation, and yet patients' out-of-pocket costs continue to skyrocket."

Price Anxiety

Americans have become increasingly anxious about the cost of medicine in recent years, owing in part to skimpier insurance plans that expose them directly to more of these costs. In a recent poll conducted for the Kaiser Family Foundation, large majorities of Republican (66%), Democratic (78%), and independent voters (72%) said they would be "more likely" to vote for a candidate for Congress if that candidate supported lowering prescription drug costs. People have seen prices hold steady or even spike for medicines that have been on the market for many years. For example, the price of insulin, a drug that has been sold in different forms in the United States since the 1920s, has dramatically increased.

At the same time, pharmaceutical companies have put headline-grabbing prices on their innovative new products, such as the oncology medicines tisagenlecleucel (Kymriah, Novartis), priced at $475,000, and axicabtagene ciloleucel (Yescarta, Kite Pharma), priced at $373,000. Cancer patients now suffer from what FDA Commissioner Scott Gottlieb, MD, in a recent speech called "financial toxicity." Other Americans worry that the same fate awaits them, even if they are paying high premiums for their insurance coverage.